GLOBAL IMAGING SYSTEMS INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K

(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the fiscal year ended March 31, 1999

OR

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from _________________ to_________________

Commission File Number 000-24373

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GLOBAL IMAGING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

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Delaware 59-3247752
(State or other jurisdiction of (I.R.S. Employer
incorporate or organization) Identification No.)

3820 Northdale Boulevard, Suite 200A 33624
Tampa, Florida (Zip code)
(Address of principal executive
offices)

Registrant's telephone number, including area code: (813) 960-5508

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Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
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None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value
(Title of class)

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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such report(s)) and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10K or any
amendment to this Form 10-K. [_]

As of June 17, 1999, the aggregate market value of the 8,707,531 shares of
Common Stock held by non-affiliates of the registrant was $145,851,144 based on
the closing sale price ($16.75) of the registrant's Common Stock as reported on
the Nasdaq National Market on such date. (For this computation, the registrant
has excluded the market value of all shares of its Common Stock reported as
beneficially owned by executive officers and directors of the registrant and
certain other stockholders; such exclusion shall not be deemed to constitute an
admission that any such person is an "affiliate" of the registrant.) As of June
17, 1999, there were outstanding 18,725,841 shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the annual report to stockholders for the year ended March 31,
1999, are incorporated by reference into Part II of this annual report.
Portions of the proxy statement for the annual stockholders meeting to be held
in August 1999 are incorporated by reference into Part III of this annual
report.

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GLOBAL IMAGING SYSTEMS, INC.

Annual Report on Form 10-K
March 31, 1999

TABLE OF CONTENTS

Page
----

PART I................................................................... 1
Item 1. Business......................................................... 1
Item 2. Properties....................................................... 9
Item 3. Legal Proceedings................................................ 9
Item 4. Submission of Matters to a Vote of Security Holders.............. 9
Executive Officers of Global............................................. 9
Risk Factors............................................................. 10
PART II.................................................................. 15
Item 5. Market for Registrant's Common Stock and Related Stockholder
Matters................................................................. 15
Item 6. Selected Financial Data.......................................... 15
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition..................................................... 15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk...... 15
Item 8. Financial Statements and Supplementary Data...................... 16
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.................................................... 16
PART III................................................................. 16
Item 10. Directors and Executive Officers of the Registrant.............. 16
Item 11. Executive Compensation.......................................... 16
Item 12. Security Ownership of Certain Beneficial Owners and Management.. 16
Item 13. Certain Transactions with Related Parties....................... 16
PART IV.................................................................. 16
Item 14. Exhibits, Financial Statements, Schedules and Reports and Form
8-K..................................................................... 16
SIGNATURES............................................................... 20

PART I

Item 1. Business

Unless the context otherwise requires, as used in this Form 10-K, the terms
"Global," "Company," "our," or "we" refer to Global Imaging Systems, Inc. and
its subsidiaries.

Cautionary Statement Regarding Forward-Looking Statements

This Form 10-K and the information incorporated into this Form 10-K contain
forward-looking statements, including statements about our acquisition and
business strategy, our expected financial position and operating results, the
projected size of our markets and our financing plans and similar matters. We
have based these forward-looking statements largely on our current expectations
and projections about future events and financial trends affecting the
financial condition of our business. These forward-looking statements are
subject to risks, uncertainties and assumptions about Global, including, among
other things:

. General economic and business conditions, both nationally and in our
markets.

. Our acquisition opportunities.

. Our expectations and estimates concerning future financial performance,
financing plans and the impact of competition.

. Anticipated trends in our business, including those described in the
information incorporated into Item 7.

. Existing and future regulations affecting our business.

. Other risk factors set forth in "Risk Factors."

In addition, in those and other portions of this annual report, the words
"believe," "may," "will," "estimate," "continue," "anticipate," "intend,"
"expect" "project" and similar expressions, as they relate to Global, its
management, and its industry are intended to identify forward-looking
statements. All forward-looking statements attributable to us or to persons
acting on our behalf are expressly qualified in their entirety by this
cautionary statement.

We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this Form 10-K might not transpire.

Global Imaging Systems

Global Imaging Systems is a consolidator in the highly fragmented office
imaging solutions industry. Global provides a broad line of office imaging
solutions, including the sale and service of automated office equipment,
network integration services, electronic presentation systems and document
imaging management systems. Since its founding in June 1994, Global has
acquired 32 businesses in the United States. Twelve of these businesses are
"core" companies, where Global concentrates administrative functions within a
region. The remaining 20 acquired businesses are "satellite" companies, which
means their administrative functions have been transferred to, and their
operations have been integrated into, a core company. Global's operating
philosophy is to "think globally, act locally." Under its decentralized
management system, Global typically continues to operate its acquired companies
under their pre-acquisition names and management in order to preserve client
relationships and motivate management.

Global believes its emphasis on superior customer service and the
contractual nature of its service business can generate significant recurring
revenue. Senior management largely attributes Global's solid historical
operating performance to: (1) employing a strict performance-based benchmarking
model, (2) pursuing a

1

disciplined acquisition strategy and (3) integrating acquisitions as they are
made. For the year ended March 31, 1999, Global had pro forma revenues of $357
million.

Global seeks to become the provider of choice for all of its customers'
office imaging needs by offering a full range of products and services and
superior customer service. While Global's clientele includes large, Fortune 500
companies, its growth has been, and is expected to be, largely driven by
serving middle market businesses. Global sells and services a variety of office
imaging solutions, including copiers, facsimile machines, printers, LCD
projectors, overhead projectors, video teleconferencing equipment, optical
scanning equipment, micrographics equipment, and the design and installation of
equipment related to computer networks. In addition, Global offers a variety of
ongoing services, including supply and service contracts, network management
contracts, technical support and training.

Global's strategic objective is to continue to grow profitably in existing
markets and new markets through internal growth and by acquiring additional
businesses. Global's strategy for stimulating internal growth is to offer new
products and services, to take advantage of cross-selling opportunities, and to
market aggressively to existing and new customers. Global enters new geographic
markets by acquiring additional core companies and expanding its core markets
through acquisitions of additional satellite companies.

Currently, Global's twelve core companies operate in 70 locations in 18
states, plus the District of Columbia. Global targets for acquisition as core
companies businesses that are leading competitors in the markets they serve.
Global's goal is to acquire core and satellite companies throughout the United
States and Canada.

Certain information regarding Global's core and satellite companies,
including pro forma revenues for the fiscal year ended March 31, 1999, is
summarized in the following table. The pro forma revenues in this table and the
pro forma information presented elsewhere in this annual report give effect to
acquisitions made during the fiscal year ended March 31, 1999 as if such
acquisitions had occurred on April 1, 1998.

Pro Forma No. of Years in Date
Core Company Region Revenues Satellites Business Acquired
(in millions)

Felco Office Systems Texas $34.7 2 14 Jul. 1994
Conway Office Products Northeast 45.2 4 22 Jan. 1995
Berney Southeast 16.3 3 34 Feb. 1995
Amcom Office Systems Western Pennsylvania 14.0 2 21 Feb. 1996
Copy Service & Supply Southeast 7.6 -- 15 Jul. 1996
Southern Business
Communications Southeast 48.2 3 18 Nov. 1996
Electronic Systems Mid-Atlantic 76.9 2 18 Jul. 1997
Quality Business Systems Pacific Northwest 22.6 3 13 Sep. 1997
Connecticut Business
Systems Northeast 22.4 1 10 Jan. 1998
Carr Business Systems Northeast 21.3 -- 52 Sep. 1998
Distinctive Business
Products Chicago Metro Area 18.0 -- 22 Dec. 1998
Capitol Office Solutions Mid-Atlantic 29.3 -- 17 Dec. 1998

Recent Developments

In March 1999 Global signed a non-binding letter of intent to acquire a
company with a total of approximately $70 million in annual revenues that would
serve as a core company for Global in the Front Range of the Rocky Mountains.
This proposed acquisition has not been included in any pro forma financial
information contained in this annual report. Global is also continually
evaluating and having discussions with other acquisition candidates as part of
its growth strategy.

2

The Industry

The office imaging solutions industry is highly fragmented. Global estimates
that there are approximately 3,700 dealer and distributor outlets in the United
States primarily engaged in the sale of copiers and other automated office
equipment and related service, parts, and supplies, and that approximately
3,100 of these dealer outlets are unaffiliated. Global believes the current and
projected sizes of the office imaging markets Global serves are as set forth in
the following table:

Domestic Sales
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1997 2002
Market (estimated) (projected)
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(in billions)

Analog black and white copier and related service and
supplies............................................. $21.1 $17.1
Digital black and white copier and related service and
supplies............................................. 3.4 16.7
Digital color copier and related service and
supplies............................................. 1.9 5.9
Network consulting and integration services........... 6.5 13.9
Network management services........................... 1.8 4.2
Electronic presentation systems....................... 1.0 1.8
Document technology systems........................... 6.4 18.6
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Total............................................... $42.1 $78.2
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Consolidation

Independent distributors and service providers are consolidating throughout
the office imaging solutions industry. A number of factors are driving this
consolidation, including the following:

Technological Change. The technology of office imaging solutions is changing
rapidly. Digital technology, which allows images to be captured, transmitted,
reproduced and stored over wide geographic areas through networks of personal
computers, has in recent years been incorporated into copiers, electronic
presentation equipment and document imaging management ("DIM") technology. As a
result, copiers, facsimile machines and printers are gradually converging in
function and computers and networks are becoming an increasingly important
component of office imaging systems. This has led larger companies to demand
more centralized network integration services over a broader geographic area.
The rapid pace of technological change, including the resulting expansion of
product offerings and increase in product support costs, have outpaced the
technical, managerial and financial resources of many smaller distributors and
service providers, causing them to seek larger partners. Further, the blurring
of the distinction among office imaging technologies and the increased role for
computers has led dealers without network integration expertise to partner with
companies that have such expertise.

Dealer Consolidation by Suppliers. The cost of new product development and
fierce competition among equipment manufacturers have led manufacturers to seek
efficiencies. As a result, manufacturers are consolidating their dealer
networks, concentrating their business with a smaller number of dealers that
possess leading service capabilities, wide geographic coverage and sufficient
financial resources.

Distribution Channel Changes. Changes in distribution channels are also
leading to consolidation in the automated office equipment market. Office
superstores and consumer electronics chains now sell lower-end office products
at prices that are forcing smaller dealers out of the market. Smaller dealers
also face difficulty competing in the market for mid- and high-range office
equipment, because they are not well equipped to provide the sophisticated
support services required by businesses that purchase these products.
Typically, office superstores and consumer electronics chains also do not offer
the support services required by purchasers of mid- and high-range office
equipment.

3

Office Imaging Products and Services

Automated Office Equipment. Dealers in the automated office equipment market
sell and service some or all of the following: black and white copiers (digital
and analog), color copiers, duplicators, facsimile equipment, printers and
multi-function equipment.

Network Integration Services. With the rise of digital technology, customers
increasingly need network integration services as part of their office imaging
solutions. Network integrators provide outsourced management and support to
organizations' computer network infrastructures. As organizations seek to take
advantage of productivity-enhancing computer network technology, they face
complex and costly issues relating to network design, selection, implementation
and management. Among other challenges, organizations must (1) select from an
expanding number of product options with shortening life cycles, (2) integrate
diverse and often incompatible hardware and software environments and (3) deal
with a shortage of qualified information technology service personnel. As a
result, many smaller businesses seek to outsource installation, upgrade and
support and many large organizations seek to outsource network improvement
functions and the evaluation of new products.

Electronic Presentation Systems. Dealers in the electronic presentation
systems market sell and service LCD projectors and panels, smartboards,
overhead projectors and video conferencing equipment. As in the automated
office equipment market, products in this market increasingly use digital
technology, and many customers for these products have designated a single
buyer to address their needs in both markets. Competition among manufacturers
in this market is strong, leading manufacturers to introduce new products
frequently.

DIM Systems. Like automated office equipment and electronic presentation
systems, DIM systems also involve digital technology and are ultimately used by
the same end-users as other types of office imaging equipment. Dealers in this
market sell and service optical disk storage equipment, write once read many
("WORM") disks and CD-ROM optical storage products, as well as micrographic
equipment (microfilm and microfiche). DIM systems capture and store large
volumes of visual data. Key customers for these products include banks,
educational institutions, government institutions, libraries and insurance
companies.

Growth Strategy

Global believes it is well positioned to benefit from industry trends and
continued consolidation in the office imaging solutions industry. Global's goal
is to become the provider of choice for all of its customers' office imaging
needs by offering a full range of products and services and superior customer
service. The key elements of Global's strategy include:

Serve as a Single Source Provider of Office Imaging Solutions. Global
believes that offering a full spectrum of products and services will give it a
competitive advantage and enable it to capitalize on its customer relationships
by cross-selling products and services. As the technology that drives copiers,
facsimiles, printers, electronic presentation equipment and DIM equipment
converges, customers increasingly need computers and networks to use these
products. Accordingly, customers are demanding more integrated office imaging
solutions. Global plans to expand its product lines so that, within each
geographic region it serves, Global can offer automated office equipment,
network integration services, electronic presentation systems and DIM systems.
As Global's operations in these last three markets expand, Global expects an
increasing percentage of its revenues and gross profits will be generated by
sales of equipment and supplies, which typically have lower gross profit
margins than sales of service and rentals. Global is also considering
leveraging its infrastructure, customer base, and expertise by offering
outsourced facilities management services.

Provide Timely and Reliable Service. Global seeks to achieve the highest
level of service. Effective and responsive service is essential to obtaining
repeat business and developing market recognition. Providing timely and high
quality service also allows Global to maintain its profit margins, engage in
cross-selling, and enjoy a source of recurring revenue.

4

Make Strategic Acquisitions. Global plans to continue acquiring core
companies in targeted geographic markets and to expand these core acquisitions
through internal growth and satellite acquisitions. Global looks for core
acquisition candidates that are led by an experienced management team that will
continue to manage the company after Global acquires it, that have a strong
regional market share, and that can grow internally and through the acquisition
of satellite companies. Global's senior management team has substantial
experience in making acquisitions. Since its founding in June 1994, Global has
acquired twelve core companies in the United States, and an additional 20
satellite companies which have been integrated into the core companies.
Global's goal is to acquire core and satellite companies throughout the United
States and Canada.

A key component of Global's growth strategy is to acquire satellite
companies in or near its core companies' markets. Core company management
frequently identifies appropriate satellite acquisition candidates. In
evaluating potential satellite acquisitions Global considers, among other
factors, the potential satellite's proximity to a core company, the fit between
its product lines and those of the nearby core company, and the potential
satellite's management, employee base and service base under contract.

Stimulate Internal Growth. Global's strategy for stimulating internal growth
in its core companies is to increase sales force productivity through
performance benchmarks; expand product and service offerings; increase sales
force size; and aggressively cross-sell products and services.

Optimize Profitability Using Global's Benchmark Model. Global's senior
management has developed an industry management model composed of a
comprehensive set of performance benchmarks. These benchmarks, which are the
focus of internal reporting from the core companies to headquarters, allow
Global's senior and local management to monitor and improve the operations of
each core company. Using these criteria, Global trains its core and satellite
company managers to optimize their business mix and improve performance.

Global strives to reduce costs by consolidating the back-office functions of
its satellite acquisitions into core operations, enabling its core companies to
decrease technician driving time and increase the productivity of sales
personnel and administrators. Global also works to reduce costs by
standardizing financial reporting, cash and inventory management, payroll,
billing, collections, insurance and employee benefit programs, and by
negotiating advantageous relationships with equipment manufacturers, other
suppliers and lessors.

Operate with a Decentralized Management Structure. Global believes that its
core companies' experienced local management possess valuable understanding of
their markets and customers. Therefore, Global gives its core company managers
responsibility for day-to-day operating decisions. Core companies and, in some
cases, satellite companies retain their local name and management after Global
acquires them. This decentralized approach permits local management to maintain
focus and motivation and optimizes customer relationships. Local management is
supported by a senior management team that focuses on Global's growth strategy
as well as corporate planning and financial reporting and analysis.

5

Products and Services

Global currently sells and services the following: (1) automated office
equipment, (2) network integration services, (3) electronic presentation
systems and (4) document imaging management systems ("DIM" systems). In each of
these markets, Global provides a number of office imaging solutions, including
the following:

Automated Office Network Electronic DIM Systems
Equipment Integration Presentation
Services Systems

. Microfiche and
microfilm
equipment
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. Network design . LCD projectors
. Black and white and and panels,
copiers installation, smartboards and
(digital and and related overhead
analog) software and projectors
hardware

. CD-ROM optical
storage
products

. Color copiers
(digital)

. Video . Write once read
. Technical conferencing many ("WORM")
support equipment disks and
contracts related
equipment

. Duplicators
(digital and
analog)

. Color printers
. Network
maintenance
contracts

. Audio visual . Related
. Facsimile equipment supplies
machines

. Training and . Related . Related service
. Printers support supplies contracts
(including
color)

. Internet . Related service. Training and
services contracts support

. Multi-function
equipment

. Training and
support

. Related supply
and service
contracts

Set forth below are Global's pro forma revenues from each of these markets
as a percentage of total pro forma revenues for the fiscal year ended March 31,
1999.

Fiscal
Year Ended
March 31,
Markets Served 1999
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Automated Office Equipment..................................... 66%
Network Integration Services................................... 21%
Electronic Presentation Systems................................ 12%
DIM Systems.................................................... 1%

Taking advantage of the "after market" opportunities generated by its sales
of office imaging equipment, Global derives a substantial amount of its
revenues from service activities. Service activities generally provide Global
with a recurring source of revenue. Global's copier service and supply
contracts, for example, provide it with a predictable source of revenue, since
payment is typically based on the number of copies customers make. In the
network integration market, Global focuses on contracts to provide ongoing
maintenance and technical support, since these types of contracts generate a
more steady revenue stream than project-based contracts.

Global believes effective and responsive service is essential for it to
obtain repeat business and to develop the market recognition it needs in order
to grow. Most of Global's copier sales, on a pro forma basis and as measured by
revenue generated, are accompanied by service and supply contracts. These
generally continue for a one year term but, in some cases, continue from month
to month. As part of Global's commitment to quality customer service, Global
works to provide its customers with speedy, reliable service. For example,
Global tries to respond to service calls from its automated office equipment
customers within two to four hours if the call comes in during business hours.
For network integration customers, Global offers a 24 hour technical assistance
"hotline." In addition, Global's service technicians are generally
manufacturer- or vendor-certified to service the equipment Global sells.

Customers, Sales and Marketing

Global believes its customers decide to purchase products and services from
Global based on a variety of factors, the most important of which are the
strength of the relationship with Global, quality of service provided, and
price.

6

Global's growth has been largely driven by serving middle market businesses.
Global also serves a number of large Fortune 500 companies as well as
educational institutions, government entities and other not-for-profit groups.
Global estimates that over 60,000 customers purchased equipment or services
from Global in the past twelve months, on a pro forma basis. During the fiscal
year ended March 31, 1999, on a pro forma basis, none of Global's customers
accounted for more than 3% of total revenues and its top five customers
collectively accounted for less than 5% of total revenues.

Because the management teams at Global's core companies understand their
markets and customer relationships, Global's core company managers make local
marketing decisions, including decisions regarding product offering mix,
promotional programs, advertising, and trade show attendance. Global employs
approximately 620 people in sales and marketing. All of Global's sales
personnel are compensated at least partly on a commission basis, with local
management determining the structure of sales compensation and commissions
within the parameters of Global's industry management model. Global generates
sales from within its existing customer base by tracking lease expirations,
cross-selling its products and services, and giving incentives to service
personnel for creating sales leads. Each of Global's core companies also
generates sales leads through telemarketing and door-to-door marketing.

Training

Global provides its sales and service employees extensive, ongoing training.
Each core company has its own technical trainer and training is scheduled on a
regular basis. Core company technical trainers are typically certified by
Global's suppliers, which makes Global's service technicians manufacturer- or
vendor-certified technicians. Global also provides formalized product and
general sales training to its sales and marketing personnel.

Suppliers

The following table lists the products Global sells and their manufacturers
in each of the office imaging markets Global serves:

Automated Office Equipment
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Copiers: Canon Inc., Konica, Mita Copystar
America, Ricoh Corporation, Savin
Corporation, Sharp, Toshiba America, Inc.
Facsimile machines: Muratec America, Inc., Panasonic
Communications and
Systems Company, Savin, Toshiba
Duplicators: Riso, Inc.
Printers: Hewlett-Packard Company, Tektronix, Inc.

Network Integration Services
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Personal and laptop computers: AST Research, Inc., Compaq Computer
Corporation, Dell Computer Corporation,
IBM, Intel Corporation, NEC America,
Inc., Toshiba
Networking software: Banyan Systems Incorporated, Microsoft
Corporation, Novell, Inc., Raptor
Systems, Inc.

Electronic Presentation Systems
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Overhead projectors: Apollo International of Delaware, Inc.,
DuKane Corporation, 3M
LCD projectors: Epson America, Inc., In Focus Systems,
Inc., Lightware, Inc., Proxima
Corporation, Sharp, Sony Electronics Inc.
Video conferencing equipment: Intel
Smart Boards: Smart Technologies, Inc.

DIM Systems
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Microfilm and microfiche equipment: Canon
Optical data storage equipment: Canon, Compaq
Document management software: Westbrook Technologies, Inc.

7

During the fiscal year ended March 31, 1999, on a pro forma basis, Global
purchased 14% of its equipment, parts and supplies from Konica and 10% from
Sharp. No other supplier represented in excess of 7% of such purchases, on a
pro forma basis.

Global's agreements with suppliers generally permit Global to sell
particular products on a nonexclusive basis in particular geographic areas. In
most cases, Global's agreements extend for one-year renewable terms, which the
supplier can choose not to renew with 30 days' notice. In addition, Global's
suppliers can terminate Global's agreements upon notice (1) if Global does not
meet minimum purchase quotas or other requirements or (2) under certain other
conditions, including a change in Global's ownership.

Leasing and Rentals

A majority of the copiers Global sells are financed by third-party leasing
companies. Under Global's "Preferred Vendor Leasing Program," Global has
granted three nationwide equipment lease vendors--General Electric Capital
Corporation, Copelco Capital, Inc., and De Lage Landen Financial Services,
Inc.--preferential rights to lease copiers to Global's customers in exchange
for their agreement to (1) offer Global's customers better leasing rates and
terms than are generally available through individual copier dealers, (2)
provide Global with control over what happens to leased equipment at the end of
the lease term and (3) use a standardized leasing application. Under these
arrangements, Global has the option to purchase the leased equipment, under
already negotiated terms, at the end of the lease term. This gives Global the
flexibility to sell the equipment to its customers at the end of the lease term
or to provide for such a sale at the time of original purchase. Global plans to
increase the use of third party leases in the electronic presentation and DIM
systems markets where, Global believes, high equipment costs make leasing an
attractive financing alternative for many customers.

In some cases, Global's automated office equipment dealers also rent
equipment. Rental arrangements provide Global with a steady, monthly revenue
stream and, like its leasing arrangements, give Global control over disposition
of the equipment at the end of the rental term.

Competition

Global operates in highly competitive markets, which forces it to compete
for customers and sometimes for acquisition candidates. Competitors in the
automated office equipment market, the electronic presentation systems market
and the DIM systems market include large dealers, including Danka, IKON and
independent dealers, as well as manufacturers' sales and service divisions,
including those of Canon, Eastman Kodak Company, Konica, Minolta Co., Ltd.,
Pitney Bowes, Inc., Wang Laboratories, Inc. and Xerox. Global also competes
with office superstores and consumer electronics chains in these markets.
Principal areas of competition in these markets include price and product
capabilities; quality and speed of post-sales service support; availability of
equipment, parts and supplies; speed of delivery; financing terms and
availability of financing, leasing, or rental programs.

Competition from large, nationwide competitors is likely to increase as
Global seeks to attract additional customers, expand its markets geographically
and broaden its product and service offerings. Competition from large,
nationwide competitors will also increase if Global's industry continues to
consolidate. Finally, as digital and other new technologies develop, Global may
face competition from new distribution channels, including computer
distributors and value added resellers, for products containing new technology.
Some competitors have greater financial and personnel resources than Global.

In the network integration services market Global competes with the large
providers, including GE Capital Information Technology Solutions, Inacom Corp.
and Vanstar Corporation; smaller competitors with regional or local operations;
and the in-house capabilities of its customers. Principal areas of competition
in this market include reputation, quality and speed of support, and price.

Global also faces competition for core and satellite acquisitions from
consolidators such as IKON, Danka, and a number of other independent dealers.

8

Employees

Global employs approximately 1,750 people, most of whom work at Global's
core companies. Of these, approximately 620 employees work in sales and
marketing, 750 in service, and 350 in operations and administration. Twenty-
nine employees work at Global's corporate headquarters in Tampa, Florida. None
of Global's employees is covered by collective bargaining agreements. Global
believes it has good relations with its employees.

Government and Environmental Regulation

Global is subject to regulation under various federal, state and local laws
relating to employee safety and health and environmental protection. Global is
not aware of any material non-compliance with any of these laws.

Item 2. Properties

None of the physical properties Global uses in its business are materially
important to Global.

Item 3. Legal Proceedings

Global is not currently involved in any legal proceeding or investigation
that it expects to have a material adverse effect on it.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of Global's stockholders during the
three months ended March 31, 1999.

Executive Officers of Global

The executive officers of Global are as follows:

Name Age Position
- ---- --- --------

Thomas S. Johnson....... 53 Director, President and Chief Executive Officer
Raymond Schilling....... 44 Senior Vice President, Chief Financial Officer, Secretary and
Treasurer
Michael Mueller......... 47 Senior Vice President, Chief Operating Officer
Alfred N. Vieira........ 51 Vice President--Service
Todd S. Johnson......... 32 Vice President--Acquisitions

Thomas S. Johnson has served as a director and as President and Chief
Executive Officer since Global's founding in June 1994. From 1991 to 1994, Mr.
Johnson was an office imaging industry consultant. From 1989 to 1990, Mr.
Johnson served as Chief Operating Officer for Danka. From 1975 to 1989, Mr.
Johnson worked at IKON (formerly known as Alco Standard Corporation) in various
staff and operating roles. When he left there in 1989, he was Vice President--
Operations of the Office Products group and was responsible for acquisitions
and turning around under-performing operations. Mr. Johnson has been involved
in the acquisition of over 60 office equipment dealers since 1985, and has over
23 years of experience in acquiring and integrating businesses. Mr. Johnson
graduated with a B.S. degree from the University of Florida in 1972, and
received his MBA from Harvard Business School in 1976.

Raymond Schilling has served as Senior Vice President of Global since April
1999 and as Vice President, Chief Financial Officer, Secretary and Treasurer of
Global since its inception in June 1994. From 1988 to 1994, Mr. Schilling was
Vice President--Finance of the California/Nevada region of McCaw Communications
and responsible for all of its finance and administrative functions. From 1980
to 1988, Mr. Schilling worked with

9

Mr. Johnson at IKON in various accounting and financial reporting functions,
including as controller of Alco Office Products, where his responsibilities
included acquisitions and evaluation, integration, development and installation
of financial systems. From 1986 to 1988, Mr. Schilling also was Vice President
of Finance and Administration of San Sierra Business Systems (an Alco Office
Products dealer). From 1976 to 1980, Mr. Schilling was employed by Price
Waterhouse as a CPA. In total, Mr. Schilling has been involved in the
acquisition of over 35 businesses and has over 16 years of experience in
acquiring and integrating businesses. Mr. Schilling graduated with a B.A. in
Economics and Accounting from Muhlenberg College in 1976.

Michael Mueller has served as Senior Vice President of Global since April
1999 and as Vice President and Chief Operating Officer of Global since January
1, 1995. From 1986 to December 1994, Mr. Mueller was employed as Vice President
by Global Services Inc., a copier and office product sales and service company
in Houston, Texas, and served as its Chief Financial Officer from 1988 to 1994.
Mr. Mueller obtained his B.B.A. from the University of Houston in 1974.

Alfred N. Vieira has served as a Vice President--Service of Global since
March 1997. From May 1996 to March 1997, Mr. Vieira served as Vice President
and General Manager of Felco Office Systems, Inc.'s four branch locations in
South Texas. From 1979 to May 1996, Mr. Vieira was employed by Global Services
Inc., and served as its Vice President of Operations from May 1988 to May 1996.
Mr. Vieira studied electrical engineering at City University of New York.

Todd S. Johnson has served as Vice President--Acquisitions since May 1999
and has been employed by Global since July 1994 in various roles, including as
Acquisition Team Manager. From 1993 to 1994, Mr. Johnson was employed as an
office imaging industry consultant. From 1989 to 1993, Mr. Johnson was an
officer in the United States Marine Corps. Mr. Johnson graduated from the
Pennsylvania State University with a B.S. in business management in 1989.

Risk Factors

Set forth below are the risks that we believe are material to investors who
purchase or own our common stock or our senior subordinated notes.

Our Indebtedness Results in Significant Debt Service Obligations and
Limitations. Because we financed our acquisitions primarily with debt, we
incurred substantial debt and, as a result, we have significant debt service
obligations. As of March 31, 1999, our total indebtedness was $168.3 million,
which represented 63.9% of our total capitalization. We also had $107.0 million
of additional borrowing availability under our senior credit facility. In
addition, our senior credit facilities and the indenture governing our senior
subordinated notes (the "notes") allow us to incur additional indebtedness
under certain circumstances. Our indebtedness poses important consequences to
investors, including the risks that:

. we will use a substantial portion of our cash flow from operations to
pay principal and interest on our debt, thereby reducing the funds
available for acquisitions, working capital, capital expenditures and
other general corporate purposes;

. we may be unable to obtain additional financing on satisfactory terms or
to otherwise fund working capital, capital expenditures, acquisitions,
and other general corporate requirements;

. our borrowings under our senior credit facility will bear interest at
variable rates, which would create higher debt service requirements if
market interest rates increase; and

. our degree of leverage may hinder our ability to adjust rapidly to
changing market conditions and could make us more vulnerable to
downturns in the economy generally or in our industry.

If we cannot generate sufficient cash flow from operations to meet our
obligations, we may be forced to reduce or delay acquisitions and other capital
expenditures, sell assets, restructure or refinance our debt, or seek
additional equity capital. We cannot assure that these remedies would be
available or satisfactory. In addition,

10

our ability to pay principal and interest on the notes and to satisfy our other
debt obligations will depend on our future operating performance. Our operating
performance will be affected by prevailing economic conditions and financial,
business and other factors which may be beyond our control.

We May Be Unable to Integrate Our Acquired Businesses into Our Operations
Profitably. Integrating our acquired businesses may involve unanticipated
delays, costs or other operational or financial problems. Successful
integration of the businesses we acquire depends on a number of factors,
including our ability to transition acquired companies to our management
information systems and the ability of our core businesses to integrate
acquired satellites into their operations. In integrating our acquired
businesses, we may not achieve expected economies of scale or profitability or
realize sufficient revenues to justify our investment. For example, if we are
unable to increase the sales force productivity at our acquired businesses as
quickly as we expect, our revenues may not justify our investment. We also face
the risk that an unexpected problem at one of our acquired companies will
require substantial time and attention from senior management, distracting
management's attention away from other aspects of our business. We cannot be
certain that our management and financial reporting systems, procedures and
controls will be able to support us as we grow.

We Need Substantial Additional Funds to Finance Our Acquisitions. We intend
to finance our future acquisitions primarily by incurring additional
indebtedness, which will be substantial in relation to our equity capital. We
cannot be certain that we will be able to borrow money for future acquisitions
on favorable terms. Also, the restrictions imposed on us under our senior
credit facilities and the indenture governing the notes may limit our ability
to borrow additional funds to purchase acquisitions. We may also pay some of
the price of future acquisitions by issuing common stock or other equity
securities to the sellers of the businesses we acquire or in public or private
offerings. Depending on the market value of our common stock, either we or the
sellers of the businesses we acquire may not be willing to use common stock for
part of the consideration we pay. To the extent we do not have access to
additional debt and do not issue equity to pay for future acquisitions, we
would need to use more of our cash resources to continue our acquisition
program. We cannot be certain that we will be able to obtain debt or equity
financing or that we will have enough cash resources available to pay for
future acquisitions.

Our Combined Operating History is Limited. Although a number of the
companies we have acquired have been in operation for some time, Global itself
has a limited history of operations and profitability. Consequently, the
financial information in this annual report may not be indicative of our
financial condition and future performance. See the information incorporated
into Item 7.

We Have Limited Operating Experience in Some of Our Target Markets. A key
element of our expansion strategy is to acquire companies in each of our
geographic markets that sell and service electronic presentation systems or
document imaging management systems or that provide network integration or
facilities management services. Our limited experience in offering these
products and services may impair our ability to identify, acquire and integrate
appropriate companies. In addition, we may not be able to cross-sell these
products and services to our different customer bases. These markets also
present us with new challenges. For example, none of our companies currently
operates in the facilities management market. Success in this market would
require that we adapt our operations expertise to running labor-intensive
businesses.

We Depend on Our Chief Executive Officer. Our success substantially depends
on the efforts and ability of Thomas S. Johnson, Global's President and Chief
Executive Officer. Mr. Johnson has developed and implemented Global's industry
management model, and has many years of experience in the office imaging
industry and in the acquisition and integration of office imaging solutions
dealers. Mr. Johnson is currently employed under an executive agreement that
renews automatically each July for a one-year period unless otherwise
terminated by either party upon 30 days notice. The loss or interruption of his
services could have an adverse effect on Global.

We Need to Attract and Retain Skilled Employees. Many of our markets are
experiencing low levels of unemployment. As a result, we must compete to
attract, motivate and retain skilled employees, particularly

11

systems integrators, service technicians, sales personnel and managers. We need
qualified service technicians to fulfill our service contracts and enter into
new ones. We need talented sales personnel to generate both sales and service
revenues. We need effective managers to integrate and operate our acquired
businesses profitably. As a result, if we cannot hire and keep skilled
employees, our business could be adversely affected.

Technological Developments Will Affect Our Business. The office imaging
solutions industry is moving toward digital technology in a multi-functional
office environment. We must be able to respond to this rapidly changing
environment. Our business will be adversely affected if (1) we or our suppliers
fail to anticipate which products or technologies will gain market acceptance
or (2) we cannot sell these products at competitive prices. We cannot be
certain that manufacturers of popular products will permit us to market their
newly developed equipment. In addition, new products containing new technology
may be sold through other channels of distribution. Technological advancements
may result in lowered per unit costs that may reduce our sales revenues and
reliability improvements that may reduce our service revenues. We will also
incur increased expenses to train our sales and service personnel on any new
technologies.

We Depend on Our Suppliers. A majority of our revenues come from the sale of
equipment and from service and supply contracts for this equipment. As a
result, our success depends on our access to reliable sources of equipment,
parts and supplies at competitive prices. During the fiscal year ended March
31, 1999, on a pro forma basis, Global purchased 14% of its equipment, parts
and supplies from Konica Business Technologies, Inc. and 10% from Sharp
Electronics Corporation. No other supplier represented in excess of 7% of such
purchases, on a pro forma basis. There is no guarantee that Konica, Sharp or
any of our other suppliers will continue to sell their products to us, or that
they will do so at competitive prices. Finally, other factors, including
reduced access to credit resulting from economic conditions in Asia, may impair
our suppliers' ability to provide products in a timely manner or at competitive
prices.

Our Markets are Highly Competitive. We operate in highly competitive
markets, which forces us to compete for customers and sometimes for acquisition
candidates. Competitors in the automated office equipment market, the
electronic presentation systems market and the DIM systems market include Xerox
Corporation, Danka Business Systems PLC, IKON Office Solutions, Inc. and other
large, independent dealers, as well as manufacturers' sales and service
divisions, office superstores and consumer electronics chains. In the network
integration services market we compete with large providers, smaller
competitors with regional or local operations, and the in-house capabilities of
our customers.

Some competitors have greater financial and personnel resources than we do.
Competition from large, nationwide competitors is likely to increase as we seek
to attract additional customers, expand our markets geographically and broaden
our product and service offerings. Competition from large, nationwide
competitors will also increase if our industry continues to consolidate.
Finally, as digital and other new technologies develop, we may face competition
from new distribution channels, including computer distributors and value added
resellers, for products containing new technology.

Year 2000 Issues May Affect Our Operations. The year 2000 issue exists
because many computer systems and applications use two-digit fields to
designate a year. Date-sensitive computer systems and programs may fail to
recognize or correctly process the year 2000 as the century date change
approaches or occurs. This inability to properly recognize or treat the year
2000 may cause systems errors or failures that could seriously disrupt or
prevent our normal business operations or could result in liability or
unanticipated costs as a result of disruptions in our customers' business
operations. The full extent of any adverse impact is impossible to determine.

We are evaluating all of our internal computers, computer equipment and
other equipment with embedded technology against year 2000 concerns. We have
identified five mission-critical aspects of our business: sales, billing,
service, delivery and accounting information systems. Should any of these
functions fail due to year 2000 issues, a material disruption in our business
could result. All of these systems except for sales may depend on the year 2000
readiness of software we purchase from the OMD Corporation. If this software is
not

12

year 2000 ready on time, multiple mission-critical aspects of our business
could be disrupted. Our operations may also be negatively affected by the
inability of third parties with whom we deal to manage this problem in a timely
manner. In particular, if our equipment vendors' products are not year 2000
ready or if year 2000 problems impair our suppliers' ability to provide
products timely and at competitive prices, we could be adversely affected.

Finally, we may also face risks relating to potential costs or liability
resulting from the year 2000 issue. Given the breadth of different products and
services we offer, we could face expenses or claims arising from the effect of
the year 2000 issue on the products we sell and service. The year 2000
readiness of these products depends on the efforts of our suppliers. See "Year
2000 Issues" in the information incorporated into Item 7.

Covenants in Our Debt Instruments Restrict Our Capacity to Borrow and
Invest, Which Could Impair Our Ability to Expand or Finance Our Operations. The
indenture governing the terms of our notes imposes operating and financial
restrictions that limit our discretion on some business matters, which could
make it more difficult for us to expand, finance our operations or engage in
other business activities that may be in our interest. These restrictions limit
or prohibit our ability to:

. incur additional debt

. pay dividends or make other distributions

. make investments or other restricted payments

. undergo a change of control

. pledge or mortgage assets

. enter into transactions with related persons

. sell assets

. consolidate, merge or sell all or substantially all of our assets

If we fail to comply with these restrictions, all of our long-term debt could
become immediately due and payable.

Fluctuations in the Market Price of Our Common Stock May Make it More
Difficult for Us to Raise Capital. The market price of our common stock is
extremely volatile and has fluctuated over a wide range. These fluctuations may
impair our ability to raise capital by offering equity securities. The market
price may continue to fluctuate significantly in response to various factors,
including:

. general trends in the office imaging solutions industry

. announcements and actions by competitors

. fluctuations in competitor's stock prices

. low trading volume

. quarterly variations in operating results

. changes in estimates by securities analysts

. our liquidity or ability to raise funds

. general economic conditions

Our Directors, Officers and Significant Stockholders May Control Global. Our
executive officers and directors and their affiliates beneficially own 53.5% of
our common stock, and Golder, Thoma, Cressey, Rauner Inc., through its
affiliation with Golder, Thoma, Cressey, Rauner Fund IV L.P., owns 39.5% of our
common stock. Accordingly, our executive officers and directors and their
affiliates, particularly Golder,

13

Thoma, Cressey, Rauner, Inc., have significant influence over the election of
directors and corporate actions requiring stockholder approval. In some cases,
Golder, Thoma, Cressey, Rauner, Inc.'s interests as a stockholder could
conflict with the interests of our noteholders or other stockholders. The
concentration of ownership of our common stock could limit the price that
certain investors might be willing to pay in the future for shares of common
stock, and could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from attempting to acquire,
control of Global.

We Are Prohibited from Paying Dividends. We do not anticipate paying any
dividends for the foreseeable future. The indenture governing our debt
prohibits us from paying cash dividends. Investors should therefore not expect
to receive dividends on shares of our common stock.

Our Quarterly Operating Results May Fluctuate Significantly. We may
experience significant quarter to quarter fluctuations in our results of
operations as a result of a variety of factors including the timing of the
acquisition and integration of acquired companies, the demand for our products
and services, the timing and introduction of new products and services by us or
our suppliers or competitors, the market acceptance of new products and
services, competitive conditions in the office imaging solutions industry and
general economic conditions. As a result, we believe that period to period
comparisons of our results of operations are not necessarily meaningful or
indicative of the results that we may achieve in any subsequent quarter or full
year. Such quarterly fluctuations may result in volatility in the market price
of our common stock, and in future quarters our results of operations could be
below the expectations of the public market. Such an event could have a
material adverse effect on the market price of our common stock.

Our Charter and Bylaws May Delay or Prevent a Takeover of Global. Our
certificate of incorporation and bylaws, as well as Delaware corporate law,
contain certain provisions that could delay, defer or prevent a change in
control of Global. These provisions could limit the price that certain
investors might be willing to pay for our common stock. Some of these
provisions allow us to issue, without stockholder approval, preferred stock
that has rights senior to our common stock. Other provisions impose various
procedural and other requirements that could make it difficult for stockholders
to effect certain corporate actions.

The Notes and Guarantees Are Unsecured and Subordinated to Our Senior
Debt. The notes are unsecured, which means that investors in the notes have no
recourse to specific assets of Global or Global's subsidiaries if a default
occurs under the notes and indenture. In addition, before we can pay principal
and interest on the notes, we must first make payments on any of our existing
and future senior debt that is in default, including all senior debt of our
subsidiaries, if any, and all outstanding amounts under our senior credit
facility.

As of March 31, 1999, we had $68.0 million of senior indebtedness
outstanding. Substantially all of our real and personal property used in our
business operations secures our obligations under our senior credit facilities.
If we default on any payments required under any of our senior debt, or if we
fail to comply with other provisions governing our senior debt such as meeting
required financial ratios, the senior lenders could declare all amounts
outstanding, together with accrued and unpaid interest, immediately due and
payable. If we are unable to repay amounts due, the lenders could proceed
against the collateral securing the debt. If the lenders proceed against any of
the collateral, we may not have enough assets left to pay our noteholders.
Moreover, if we become bankrupt or similarly reorganize, we may not be able to
use our assets to pay our noteholders until after we pay all of our senior
debt. In addition, the senior credit facility may prohibit us from paying
amounts due on the notes, or from purchasing, redeeming or otherwise acquiring
the notes if a default exists under our senior debt.

We May Not Have Sufficient Funds to Repay the Notes Upon a Change of
Control. If we experience certain changes of control, our noteholders will have
the right to require us to purchase the notes at a purchase price equal to 101%
of the principal amount of the notes plus accrued and unpaid interest. In such
circumstances, we may also be required to (1) repay our outstanding senior debt
or (2) obtain our lenders' consent to our purchase of the notes. If we cannot
repay our debt or cannot obtain the needed consents, we may

14

be unable to purchase the notes. Upon a change of control, we cannot guarantee
that we will have sufficient funds to make any debt payment, including
purchases of the notes. The failure to purchase the notes would be an event of
default under the indenture governing the notes. To avoid default, we may try
to refinance our debt. We cannot guarantee, however, that such refinancing
would be available or would be on favorable terms.

The events that qualify as a change of control under the indenture may also
be events of default under the senior credit facility or other indebtedness.
An event of default under the senior credit facility would permit our lenders
to accelerate our indebtedness. If we cannot repay such borrowings when due,
the lenders could proceed against the collateral securing the debt.

PART II

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters

Except for the information regarding recent sales of unregistered
securities set forth below, the information required by this item is set forth
in the "quarterly financial data" appearing on page 40 of Global's 1999 Annual
Report to Stockholders and is incorporated herein by reference. Portions of
Global's 1999 Annual Report to Stockholders that are incorporated herein are
filed as Exhibit 13.1 hereto.

Recent Sales of Unregistered Securities

Between April 1, 1998 and March 31, 1999 Global sold and issued the
following unregistered securities:

(a) Between August 1998 and February 1999, Global sold a total of 1,143,797
shares of common stock to owners of seven businesses it acquired in exchange
for ownership interests in those businesses valued at $16.4 million. These
sales and issuances of securities were exempt from registration under the
Securities Act by virtue of Section 4(2) or Regulation D promulgated
thereunder. Appropriate legends are affixed to the stock certificates issued
in these transactions. All recipients received adequate information about
Global or had access, through employment or other relationships, to such
information.

(b) On March 8, 1999, Global sold $100 million in 10 3/4% senior
subordinated notes to qualified institutional buyers, as defined in Rule 144A
under the Securities Act, in a private placement exempt from registration
under the Securities Act by virtue of Section 4(2) or Rule 144A or Regulation
S thereunder. The initial purchasers of the notes were First Union Capital
Markets, Prudential Securities, Raymond James & Associates, Inc. and Scotia
Capital Markets. The notes were sold for an aggregate price of $100 million.
The initial purchasers' discount was $2.5 million.

Item 6. Selected Financial Data

The presentation of selected financial data as of and for the five years
ended March 31, 1999 is included in the "selected financial data" section
appearing on page 12 of Global's 1999 Annual Report to Stockholders and is
incorporated herein by reference.

Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition

The information required by this item is set forth in the "management's
discussion and analysis" appearing on pages 13 through 21 of Global's 1999
Annual Report to Stockholders, and is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to changes in interest rates, primarily from its
long-term revolving credit agreement. Interest rate cap agreements are used to
reduce certain exposures to interest rate fluctuations. The

15

Company also has long term debt that bears a fixed rate. There is a risk that
market rates will decline and the required payments will exceed those based on
current market rates on the long term debt.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary financial information are set
forth in pages 22 through 39 of Global's 1999 Annual Report to Stockholders and
are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

For information with respect to the executive officers of Global, see
"Executive Officers of Global" at the end of Part I of this report. For
information with respect to the directors of Global, see "Nomination and
Election of Directors" in the proxy statement for the annual meeting of
stockholders to be held in August 1999, which is incorporated herein by
reference. Information required by Item 405 of Regulation S-K is included under
the caption "Section 16(a) Beneficial Ownership Reporting Compliance" in
Global's proxy statement for the annual meeting of stockholders to be held in
August 1999 and is incorporated herein by reference.

Item 11. Executive Compensation

Information with respect to executive compensation is incorporated herein by
reference to the information under the captions "Compensation of Directors" and
"Executive Compensation" in Global's proxy statement for the annual meeting of
stockholders to be held in August 1999.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Information with respect to security ownership of certain beneficial owners
and management of Global is incorporated herein by reference to the information
under the caption "Voting Securities and Principal Holders Thereof" in Global's
proxy statement for the annual meeting of stockholders to be held in August
1999.

Item 13. Certain Transactions with Related Parties

Information with respect to certain relationships and transactions is
incorporated herein by reference to the information under the caption "Certain
Relationships and Transactions" in Global's proxy statement for the annual
meeting of stockholders to be held in August 1999.

PART IV

Item 14. Exhibits, Financial Statements, Schedules and Reports and Form 8-K

(a) 1. Financial Statements

The consolidated financial statements as of March 31, 1999 and 1998 and for
each of the three years in the period ended March 31, 1999, together with the
report thereon of Ernst & Young LLP dated May 12, 1999, appearing on pages 22
through 39 of Global's 1999 Annual Report to Stockholders are incorporated by
reference into Part II, Item 8 of this annual report. With the exception of the
aforementioned information and the information incorporated by reference in
Part II, Items 5, 6, 7 and 8 of this annual report, Global's 1999 Annual Report
to Stockholders is not to be deemed filed as part of this report.

Consolidated statements of operations for the years ended March 31, 1999,
1998 and 1997

16

Consolidated balance sheets as of March 31, 1999 and 1998

Consolidated statements of cash flows for the years ended March 31, 1999,
1998 and 1997

Consolidated statements of stockholders' equity for the years ended March
31, 1999, 1998 and 1997

Notes to consolidated financial statements.

Report of Independent Auditors.

(a) 2. Financial Statement Schedules Required by Items 8 and 14(d)

Included in this annual report is the following additional financial data
which should be read in conjunction with the consolidated financial statements
in Global's 1999 Annual Report to Stockholders:

Report of Independent Auditors

Schedule II--Valuation and Qualifying Accounts for each of the three years
in the period ended March 31, 1999

Supplemental schedules not included with the additional financial data have
been omitted because they are not applicable or the required information is
shown in the financial statements or notes thereto.

(a) 3. Exhibits

3.1 Amended and Restated Certificate of Incorporation of Global Imaging
Systems, Inc. (1)
3.2 Amended and Restated Bylaws of Global Imaging Systems, Inc. (1)
4.1 Specimen common stock certificate. (1)
4.2 Indenture dated as of March 8, 1999 between Global, the subsidiary
guarantors and United States Trust Company of New York, as Trustee,
relating to the 10 3/4% Senior Subordinated Notes Due 2007. (2)
4.3 Form of Exchange Note. (2)
4.4 Credit Agreement, dated as of July 31, 1998, by and among the Company
and its subsidiaries, as Borrowers, the Lenders referred to therein,
First Union National Bank, as Administrative Agent, and ScotiaBanc,
Inc., as Documentation Agent. (3)
10.1 Registration Agreement, dated as of June 9, 1994, as amended, by and
among Global and the stockholders identified therein. (Incorporated by
reference to Global's Registration Statement on Form S-1, No. 333-48103,
as filed on March 17, 1998.)
10.2 Termination Agreement, dated as of May 27, 1998, by and among Global;
FUND IV; Golder, Thoma, Cressey, Rauner, Inc. and the stockholders
identified therein. (4)
10.3 Executive Agreement, dated as of June 9, 1994, as amended, by and among
Global, Thomas S. Johnson and FUND IV. (4)*
10.4 Executive Agreement, dated as of June 9, 1994, as amended, by and among
Global, Raymond Schilling and FUND IV. (4)*
10.5 Executive Agreement, dated as of January 1, 1995, as amended, by and
among Global, H. Michael Mueller and FUND IV. (4)*
10.6 Executive Agreement, dated as of March 31, 1997, by and among Global,
Alfred N. Vieira and FUND IV. (4)*
10.7 1998 Stock Option and Incentive Plan. (4)*
10.7a Form of Incentive Stock Option Agreement. (4)*
10.7b Form of Non-Qualified Stock Option Agreement. (4)*
10.7c Form of Director's Stock Option Agreement. (4)*
10.7d Director Non-Incentive Stock Option Agreement. (5)*
10.7e Amendments to Global Imaging Systems, Inc. 1998 Stock Option and
Incentive Plan and forms of stock option agreements. (5)*

17

10.8 Form of Supply Agreement between the Company and Konica. (6)**
10.9 Non-Exclusive Third Party Lessor Agreement, dated July 16, 1996, as
amended, by and between Global and General Electric Capital Corporation.
(6)**
10.10 License Agreement, dated as of July 31, 1996, as amended, between Global
and Copelco Capital, Inc. (6)**
10.11 Non-Exclusive Third Party Lessor Agreement, dated July 26, 1996, as
amended, by and between Global and Tokai Financial Services, Inc. (6)**
10.12 Stock Purchase Agreement, dated as of June 27, 1996 by and among Global
as Buyer, Copy Service & Supply, Inc., Office Furniture Concepts, Inc.,
CSS Leasing, LLC and Terry K. Smith and Crystal E. Smith as Sellers. (4)
10.13 Stock Purchase Agreement, dated as of November 13, 1996 by and among
Global as Buyer and Southern Business Communications, Inc. and Mark M.
Lloyd and Arthur E. Kreps as Sellers. (4)**
10.14 Asset Purchase Agreement, dated as of November 13, 1996 by and among
ATS-Atlanta One, LLC as Seller, ATS-Atlanta One, Inc. as Purchaser, and
ATS-Atlanta, Inc., Mark M. Lloyd and Arthur E. Kreps. (4)
10.15 Stock Purchase Agreement, dated as of August 7, 1997 by and among
Global, ESI Acquisition Corporation as Buyer, Electronic Systems, Inc.
("ESI") and the Shareholders of ESI as Sellers. (4)**
10.16 Stock Purchase Agreement, dated as of August 29, 1997 by and among
Global, Conway Office Products as Buyer, Eastern Copy Products, Inc. and
Michael E. Kleinhans as Seller. (4)
10.17 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Duplicating Specialties, Inc. (d/b/a Copytronix) and
Dean Groves as Seller. (4)**
10.18 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Quality Business Systems, Inc. and Gary Stevens as
Seller. (4)**
10.19 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Cascade Office Systems, Inc. and Fred Woodard as
Seller. (4)**
10.20 Stock Purchase Agreement, dated as of December 23, 1997 by and among
Global, ESI as Buyer, Electronic Systems of Richmond, Inc. ("ESRI") and
the Shareholders of ESRI as Seller. (4)**
10.21 Stock Purchase Agreement, dated as of December 31, 1997, as assigned, by
and among Global, Connecticut Business Systems, Inc. as Buyer, and the
Company, Michael E. Shea, Jr. and Peter Wenzke as Sellers. (4)**
10.22 Asset Purchase Agreement, dated as of February 26, 1998 by and among
Connecticut Systems, Inc., Bloom's Business Systems, a division of
Bloom's Incorporated, the Assets and Bloom's Incorporated as Seller.
(4)**
10.23 Stock Purchase Agreement, dated as of November 13, 1996, by and among
Global as Buyer, Southern Business Communications of D.C., Inc., and
George Gough, Mark M. Lloyd, and Arthur E. Kreps as Sellers. (4)
10.24 Equity Subscription Agreement, dated as of March 27, 1998, by and among
Global, FUND IV, JNL and Thomas S. Johnson. (4)
10.25 Form of Indemnification Agreement between Global and its directors and
executive officers. (1)*
10.26 Stock Purchase Agreement, dated as of August 31, 1998, by and among
Global and Southern Business Communications, Inc. ("SBC") as Buyer,
Centre Business Products, Inc., and the shareholders thereof, as
Sellers. (3)
10.27 Stock Purchase Agreement, dated as of September 16, 1998, by and among
Global, Carr Acquisition Corporation, as buyer, Carr Business Machines
of Great Neck Inc. (d/b/a Carr Business Systems) and its Shareholders,
as Sellers. (Incorporated by reference to Global's Current Report on
Form 8-K, as filed with the SEC on September 29, 1998.)
10.28 Stock Purchase Agreement, dated as of September 28, 1998, by and among
Global and SBC as Buyer, ProView, Inc., and the Shareholders thereof, as
Sellers. (3)
10.29 Stock Purchase Agreement, dated as of November 19, 1998, by and among
Global as Buyer, Capitol Office Solutions, Inc., FUND IV, Armen
Manoogian, and the other persons named therein as Sellers. (Incorporated
by reference to Global's Current Report on Form 8-K, as filed with the
SEC on January 5, 1998.)

18

10.30 Stock Purchase Agreement, dated as of December 22, 1998, by and among
Global as Buyer, Distinctive Business Products, Inc., and the
shareholders thereof, as Sellers. (Incorporated by reference to Global's
Quarterly Report on Form 10-Q filed with the SEC on February 16, 1999.)
10.31 Merger Agreement and Plan of Merger, dated as of February 26, 1999, by
and among Global, Dahill Acquisition, Inc., Dahill Industries, Inc. and
Randall E. Davidson. (2)
10.32 Registration Rights Agreement, dated March 8, 1999, by and among Global,
the subsidiary guarantors, First Union Capital Markets Corp., Prudential
Securities Incorporated, Raymond James & Associates, Inc. and Scotia
Capital Markets (USA) Inc. (2)
11.1 Statement regarding computation of per share earnings (See Consolidated
Statements of Operations for the years ended March 31, 1999, 1998 and
1997 incorporated herein and Note 7 to the Notes to Consolidated
Financial Statements for the same period).
13.1 Incorporated portions of Annual Report to Stockholders for the Year
Ended March 31, 1999.
21.1 Subsidiaries of Global.
23.1 The consent of Ernst & Young LLP.
27.1 Financial Data Schedule.

- --------
(1) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on May 8, 1998.
(2) Incorporated by reference to Global's Registration Statement on Form S-4,
No. 333-78093, as filed with the SEC on May 7, 1999.
(3) Incorporated by reference to Global's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998.
(4) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on June 11, 1998.
(5) Incorporated by reference to Global's Registration Statement on Form S-8,
No. 333-80801, as filed with the SEC on June 16, 1999.
(6) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on March 27, 1998.
* Management contract or compensatory plan, contract or arrangement.
** Confidential treatment has been granted for portions of this exhibit.

(b) Reports on Form 8-K

The Company filed three reports on Form 8-K during the last quarter of the
fiscal year ended March 31, 1999.

The Company's Current Report on Form 8-K filed January 5, 1999, as amended
on February 9, 1999, reported the acquisition of a business and contained
financial statements relating to the acquisition.

The Company's Current Report on Form 8-K filed on February 25, 1999 reported
the Company's announcement of plans to offer senior subordinated notes. The
Company's Current Report on Form 8-K filed on March 16, 1999 reported the
Company's announcement of its sale of $100 million in aggregate principal
amount of 10 3/4% Senior Subordinated Notes due 2007.

19

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Global Imaging Systems, Inc. has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

Global Imaging Systems, Inc.

/s/ Thomas S. Johnson
By: _________________________________
Thomas S. Johnson
President and Chief Executive
Officer

Date: June 23, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of June 23, 1999.

Name Title
---- -----

/s/ Thomas S. Johnson President, Chief Executive
___________________________________ Officer and Director (Principal Executive
Thomas S. Johnson Officer)

Senior Vice President, Chief Financial
/s/ Raymond Schilling Officer,
___________________________________ Secretary and Treasurer (Principal
Raymond Schilling Financial and Accounting Officer)

/s/ Carl D. Thoma Chairman of the Board
___________________________________
Carl D. Thoma

/s/ L. Neal Berney Director
___________________________________
L. Neal Berney

/s/ Bruce D. Gorchow Director
___________________________________
Bruce D. Gorchow

/s/ William C. Kessinger Director
___________________________________
William C. Kessinger

/s/ Edward N. Patrone Director
___________________________________
Edward N. Patrone

20

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Global Imaging Systems, Inc.

We have audited the consolidated financial statements of Global Imaging
Systems, Inc. as of March 31, 1999 and 1998, and for each of the three years in
the period ended March 31, 1999, and have issued our report thereon dated May
12, 1999. Our audits also included the financial statement schedule listed in
Item 14(a) of the Annual Report (Form 10-K). This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Tampa, Florida,
May 12, 1999

21

GLOBAL IMAGING SYSTEMS, INC.

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Reserve for returns and allowances and bad debts:

Additions
----------------------
Balance at the Charged to Charged to Balance at the
Beginning of Costs and Other End of
the period Expenses Accounts(1) Deductions the period
-------------- ---------- ----------- ---------- --------------

Year Ended:
March 31, 1997......... $ 200,000 $ 30,824 $ 147,005 $ 68,785 $ 309,044
March 31, 1998......... $ 309,044 $289,879 $ 532,689 $ 261,068 $ 870,544
March 31, 1999......... $ 870,544 $345,993 $ 472,583 $ 335,888 $1,353,232

Reserve for excess and slow-moving inventory:

Additions
----------------------
Balance at the Charged to Charged to Balance at the
Beginning of Costs and Other End of
the period Expenses Accounts(1) Deductions the period
-------------- ---------- ----------- ---------- --------------

Year Ended:
March 31, 1997......... $ 133,026 $256,280 $ 340,000 $ 403,207 $ 326,099
March 31, 1998......... $ 326,099 $888,802 $ 686,877 $ 606,758 $1,295,020
March 31, 1999......... $1,295,020 $759,721 $1,160,660 $1,004,646 $2,210,755

- --------
(1) These amounts primarily represent reserve balances acquired in connection
with business combinations.

22

INDEX TO EXHIBITS

Exhibit
No. Description
------- -----------

3.1 Amended and Restated Certificate of Incorporation of Global Imaging
Systems, Inc. (1)
3.2 Amended and Restated Bylaws of Global Imaging Systems, Inc. (1)
4.1 Specimen common stock certificate. (1)
4.2 Indenture dated as of March 8, 1999 between Global, the subsidiary
guarantors and United States Trust Company of New York, as Trustee,
relating to the 10 3/4% Senior Subordinated Notes Due 2007. (2)
4.3 Form of Exchange Note. (2)
4.4 Credit Agreement, dated as of July 31, 1998, by and among the Company
and its subsidiaries, as Borrowers, the Lenders referred to therein,
First Union National Bank, as Administrative Agent, and ScotiaBanc,
Inc., as Documentation Agent. (3)
10.1 Registration Agreement, dated as of June 9, 1994, as amended, by and
among Global and the stockholders identified therein. (Incorporated by
reference to Global's Registration Statement on Form S-1, No. 333-
48103, as filed on March 17, 1998.)
10.2 Termination Agreement, dated as of May 27, 1998, by and among Global;
FUND IV; Golder, Thoma, Cressey, Rauner, Inc. and the stockholders
identified therein. (4)
10.3 Executive Agreement, dated as of June 9, 1994, as amended, by and
among Global, Thomas S. Johnson and FUND IV. (4)*
10.4 Executive Agreement, dated as of June 9, 1994, as amended, by and
among Global, Raymond Schilling and FUND IV. (4)*
10.5 Executive Agreement, dated as of January 1, 1995, as amended, by and
among Global, H. Michael Mueller and FUND IV. (4)*
10.6 Executive Agreement, dated as of March 31, 1997, by and among Global,
Alfred N. Vieira and FUND IV. (4)*
10.7 1998 Stock Option and Incentive Plan. (4)*
10.7a Form of Incentive Stock Option Agreement. (4)*
10.7b Form of Non-Qualified Stock Option Agreement. (4)*
10.7c Form of Director's Stock Option Agreement. (4)*
10.7d Director Non-Incentive Stock Option Agreement. (5)*
10.7e Amendments to Global Imaging Systems, Inc. 1998 Stock Option and
Incentive Plan and forms of stock option agreements. (5)*
10.8 Form of Supply Agreement between the Company and Konica. (6)**
10.9 Non-Exclusive Third Party Lessor Agreement, dated July 16, 1996, as
amended, by and between Global and General Electric Capital
Corporation. (6)**
10.10 License Agreement, dated as of July 31, 1996, as amended, between
Global and Copelco Capital, Inc. (6)**
10.11 Non-Exclusive Third Party Lessor Agreement, dated July 26, 1996, as
amended, by and between Global and Tokai Financial Services, Inc.
(6)**
10.12 Stock Purchase Agreement, dated as of June 27, 1996 by and among
Global as Buyer, Copy Service & Supply, Inc., Office Furniture
Concepts, Inc., CSS Leasing, LLC and Terry K. Smith and Crystal E.
Smith as Sellers. (4)
10.13 Stock Purchase Agreement, dated as of November 13, 1996 by and among
Global as Buyer and Southern Business Communications, Inc. and Mark M.
Lloyd and Arthur E. Kreps as Sellers. (4)**
10.14 Asset Purchase Agreement, dated as of November 13, 1996 by and among
ATS-Atlanta One, LLC as Seller, ATS-Atlanta One, Inc. as Purchaser,
and ATS-Atlanta, Inc., Mark M. Lloyd and Arthur E. Kreps. (4)
10.15 Stock Purchase Agreement, dated as of August 7, 1997 by and among
Global, ESI Acquisition Corporation as Buyer, Electronic Systems, Inc.
("ESI") and the Shareholders of ESI as Sellers. (4)**
10.16 Stock Purchase Agreement, dated as of August 29, 1997 by and among
Global, Conway Office Products as Buyer, Eastern Copy Products, Inc.
and Michael E. Kleinhans as Seller. (4)

23

Exhibit
No. Description
------- -----------

10.17 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Duplicating Specialties, Inc. (d/b/a Copytronix) and
Dean Groves as Seller. (4)**
10.18 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Quality Business Systems, Inc. and Gary Stevens as
Seller. (4)**
10.19 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Cascade Office Systems, Inc. and Fred Woodard as
Seller. (4)**
10.20 Stock Purchase Agreement, dated as of December 23, 1997 by and among
Global, ESI as Buyer, Electronic Systems of Richmond, Inc. ("ESRI")
and the Shareholders of ESRI as Seller. (4)**
10.21 Stock Purchase Agreement, dated as of December 31, 1997, as assigned,
by and among Global, Connecticut Business Systems, Inc. as Buyer, and
the Company, Michael E. Shea, Jr. and Peter Wenzke as Sellers. (4)**
10.22 Asset Purchase Agreement, dated as of February 26, 1998 by and among
Connecticut Systems, Inc., Bloom's Business Systems, a division of
Bloom's Incorporated, the Assets and Bloom's Incorporated as Seller.
(4)**
10.23 Stock Purchase Agreement, dated as of November 13, 1996, by and among
Global as Buyer, Southern Business Communications of D.C., Inc., and
George Gough, Mark M. Lloyd, and Arthur E. Kreps as Sellers. (4)
10.24 Equity Subscription Agreement, dated as of March 27, 1998, by and
among Global, FUND IV, JNL and Thomas S. Johnson. (4)
10.25 Form of Indemnification Agreement between Global and its directors and
executive officers. (1)*
10.26 Stock Purchase Agreement, dated as of August 31, 1998, by and among
Global and Southern Business Communications, Inc. ("SBC") as Buyer,
Centre Business Products, Inc., and the shareholders thereof, as
Sellers. (3)
10.27 Stock Purchase Agreement, dated as of September 16, 1998, by and among
Global, Carr Acquisition Corporation, as buyer, Carr Business Machines
of Great Neck Inc. (d/b/a Carr Business Systems) and its Shareholders,
as Sellers. (Incorporated by reference to Global's Current Report on
Form 8-K, as filed with the SEC on September 29, 1998.)
10.28 Stock Purchase Agreement, dated as of September 28, 1998, by and among
Global and SBC as Buyer, ProView, Inc., and the Shareholders thereof,
as Sellers. (3)
10.29 Stock Purchase Agreement, dated as of November 19, 1998, by and among
Global as Buyer, Capitol Office Solutions, Inc., FUND IV, Armen
Manoogian, and the other persons named therein as Sellers.
(Incorporated by reference to Global's Current Report on Form 8-K, as
filed with the SEC on January 5, 1998.)
10.30 Stock Purchase Agreement, dated as of December 22, 1998, by and among
Global as Buyer, Distinctive Business Products, Inc., and the
shareholders thereof, as Sellers. (Incorporated by reference to
Global's Quarterly Report on Form 10-Q filed with the SEC on February
16, 1999.)
10.31 Merger Agreement and Plan of Merger, dated as of February 26, 1999, by
and among Global, Dahill Acquisition, Inc., Dahill Industries, Inc.
and Randall E. Davidson. (2)
10.32 Registration Rights Agreement, dated March 8, 1999, by and among
Global, the subsidiary guarantors, First Union Capital Markets Corp.,
Prudential Securities Incorporated, Raymond James & Associates, Inc.
and Scotia Capital Markets (USA) Inc. (2)
11.1 Statement regarding computation of per share earnings (See
Consolidated Statements of Operations for the years ended March 31,
1999, 1998 and 1997 incorporated herein and Note 7 to the Notes to
Consolidated Financial Statements for the same period).
13.1 Incorporated portions of Annual Report to Stockholders for the Year
Ended March 31, 1999.
21.1 Subsidiaries of Global.
23.1 The consent of Ernst & Young LLP.
27.1 Financial Data Schedule.

- --------
(1) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on May 8, 1998.
(2) Incorporated by reference to Global's Registration Statement on Form S-4,
No. 333-78093, as filed with the SEC on May 7, 1999.

24

(3) Incorporated by reference to Global's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998.
(4) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on June 11, 1998.
(5) Incorporated by reference to Global's Registration Statement on Form S-8,
No. 333-80801, as filed with the SEC on June 16, 1999.
(6) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on March 27, 1998.
* Management contract or compensatory plan, contract or arrangement.
** Confidential treatment has been granted for portions of this exhibit.

25